Jun 23, 2015

Happy Anniversary, Ex-Im Bank!

Post by Freedom Partners

Arlington, VA — Happy anniversary to corruption and cronyism at the Export-Import Bank.

Exactly one year ago today, The Wall Street Journal reported that four officials at the bank had been removed or suspended “amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies.”

On June 30, it is expected that the Export-Import Bank’s charter will officially lapse. We can only hope this anniversary will serve as a reminder to Washington about the culture of corruption that reviving the bank would enable.

Corruption at the Ex-Im Bank

“Four Officials . . . Suspended Or Removed.” “The U.S. Export-Import Bank has suspended or removed four officials in recent months amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies, several people familiar with the matter said. . . .  The Ex-Im Bank hasn’t disclosed information about the investigations, and declined to comment on Mr. Gutierrez’s status, citing privacy laws.” (Damian Paletta, Officials At The Ex-Im Bank Face Investigations,” Wall Street Journal, 06/24/14)

One Official “Accepted Bribes Totaling More Than $78,000 . . . On 19 Separate Occasions.” “Gutierrez admitted that on 19 separate occasions between June 2006 and December 2013, he accepted bribes totaling more than $78,000 in return for recommending the approval of unqualified loan applications and improperly expediting other applications.” (“Former Loan Officer at Export-Import Bank Pleads Guilty to Accepting Over $78,000 in Bribes,” Department of Justice, 04/22/15)

“Central To The Agency’s Core Mission.” “One employee, Johnny Gutierrez, an official in the short-term trade finance division, allegedly accepted cash payments in exchange for trying to help a Florida company obtain U.S. government financing to export construction equipment to Latin America . . . Of the four employees [suspended or removed], Mr. Gutierrez’s responsibilities were most central to the agency’s core mission of financing exports.” (Damian Paletta, “Ex-Im Bank Officials Are Facing Probes,” Wall Street Journal, 06/24/14)

Another Export-Import Bank Official Was Indicted After Accepting $100,000 In Bribes From A Corporation In Nigeria—And The Deal Was Brokered By A Sitting Congressman. “According to [Export-Import Bank official Maureen] Scurry, [Netlink Digital Television] chairman Otunba Fasawe gave her a ‘gift’ of $100,000 in early 2004. . . . Scurry received the money after she arranged and attended a meeting with [Congressman William] Jefferson, Jackson, Fasawe, and a member of the Ex-Im Bank’s board. . . . In other words, Fasawe gave Scurry $100,000 at the height of Jefferson’s efforts to secure a U.S. taxpayer-backed loan for NDTV. And according to the indictment Jefferson encouraged his partners in these schemes to dole out bribes as frequently as he asked for them.” (Stephen Spruiell, “Following William Jefferson To The Bank,” National Review, 06/07/07)

“Pocketed Loans . . . Never Connected With Real Transactions.” “The Miami-based financial services company whose former employee allegedly pocketed loans from the Export-Import Bank that were never connected with real transactions has agreed to a $3.8 million settlement, the Justice Department announced Thursday. . . . Ricardo Maza, a former Hencorp [Becstone Capital] business agent based in Peru, was accused of creating false documentation to get Ex-Im guarantees ‘on which no products were sold or exported.’ Maza allegedly diverted the loans to himself, his friends and his business associates in Peru.” (Adam Behsudi, “Morning Trade,” Politico, 03/13/15)

“31 Open Fraud Investigations Involving Ex-Im.” ““At our last joint hearing on Ex-Im, the subcommittees learned from Ex-Im’s acting Inspector General that there are at least 31 open fraud investigations involving Ex-Im and the possibility of indictments in the future.” (“Subcommittees Examine the Export-Import Bank’s Mandates,” United States House of Representatives, 04/30/15)

“74 Cases . . . Of ‘Integrity’ Investigations Since April 2009.” “Based on a review of government documents, The Heritage Foundation has determined that there have been at least 74 cases since April 2009 in which bank officials were forced to act on the basis of ‘integrity’ investigations by the Office of Inspector General. Dozens of other fraud cases involving Ex-Im beneficiaries have been referred to the Department of Justice for prosecution. . . .  For example, the bank approved 96 loan transactions in a two-year period for Gangland, USA, which purported to export electronics from Miami to South America. According to prosecutors, company owner Jose L. Quijano received more than $3.6 million in fraudulent loans from the bank.” (Diane Katz, “Careless Lending At Ex-Im Bank Invites Fraud,” Heritage Foundation, 06/24/14)

“85 Indictments . . . Since [Chairman Hochberg Has] Taken The Helm.” “Since you have taken the helm of Ex-Im, 65 matters have been referred to prosecution, 31 arrest warrants, 85 indictments, 48 criminal judgments, decades of combined prison time, a quarter of billion in fines, restitution and forfeiture.” (Rep. Jeb Hensarling, “Subcommittees Examine the Export-Import Bank’s Mandates,” United States House of Representatives,” 04/30/15)


Click Here To See The Full-Size Infographic.

Cronyism at the Ex-Im Bank

Boeing Raked In More Than $8 Billion In Financing From The Ex-Im Bank In 2014, An Entire 40% Of The Bank’s Funds. “In fiscal year 2014, Ex-Im authorized $10.8 billion in long-term loan guarantees, which is the Bank’s largest program. The first chart (left) shows that $7.4 billion of that amount, or 68.3 percent, belonged to Boeing. The second chart (center) shows that, of the $20.5 billion in total authorizations across all programs made by Ex-Im last year, 40 percent belonged to Boeing.” (Veronique de Rugy, “Export-Import Is Still Boeing’s Bank,” Mercatus Center, 03/03/15)

Ex-Im Asked Boeing To Help Craft The Bank’s Rule Governing Aircraft Sales, Directly Padding The Company’s Bottom Line. “When the Export-Import Bank sought to respond to critics with tighter rules for aircraft sales, it reached out to a company with a vested interest in the outcome: Boeing Co., the biggest beneficiary of the bank’s assistance. For months in 2012, according to about 50 pages of emails reviewed by The Wall Street Journal, the bank worked with Boeing to write rules that would satisfy critics in Congress and the domestic commercial airline industry—while leaving most sales of Boeing’s airplanes to foreign carriers unscathed.” (Brody Mullins, “Boeing Helped Craft Own Loan Rule,” Wall Street Journal, 03/12/15)

“What Would Be Most Palatable To Boeing?” In one email where the two sides discussed who should conduct the analysis, Ms. Avett, the Ex-Im Bank policy analyst, asks for input on ‘what would be most palatable to Boeing.’” (Brody Mullins, “Boeing Helped Craft Own Loan Rule,” Wall Street Journal, 03/12/15)

Boeing Has Spent $69 Million Lobbying In Support Of The Ex-Im Bank And Other Interests Since 2012. “Boeing has already put up more than $69 million over that same period on Ex-Im and other interests, according to the documents. ‘We have been lobbying a lot on this because it’s a very important issue for us,’ said Tim Neale, Boeing’s government operations spokesman. ‘We know our business, and we know there are customers even in times of good credit availability that need a government loan guarantee.’ What is at stake for Boeing is clear. . . . Boeing is by far the bank’s biggest beneficiary, a situation that has led critics of the credit agency to deride it as a vehicle for ‘crony capitalism’ and ‘corporate welfare.’” (Jonathan Weisman and Eric Lipton, “Boeing and Delta Spend Millions In Fight Over Export-Import Bank’s Existence,” New York Times, 04/06/15)

Rep. Mark Sanford Admitted That Ex-Im Benefits “Large Corporations That Are Well Funded,” And Not Exactly The “Neediest Of The Needy,” But Would Vote For Ex-Im To Benefit Boeing. “[The bank’s] clients include Boeing, which has a plant in North Charleston, not the ‘neediest of the needy,’ Sanford said. ‘(W)e’re dealing with large corporations that are well funded and have access to a variety of different insurance and capital sources, and if we can’t knock out a program like that, then how are we going to knock out anything in terms of limiting government?’ Sanford asked. But, he added, ‘On this one, I have to be wholly inconsistent because my philosophy would line up with Mick’s, but I think I have to vote with my district.’ The bank, Sanford added, is ‘deeply important to a company like Boeing.’” (Jamie Self, “GOP Congressmen Differ On Boeing-Related Issue,” The State, 3/31/15)

In October 2009, Then-Secretary Of State Hillary Clinton Made A “Shameless Pitch” For Boeing To Russian Airline Rosavia—Which Included An Invitation To Apply For Financing From The Ex-Im Bank. “I also want to thank the Export-Import Bank of the United States. They have a long history of supporting exports to Russia, including the sale of aircraft. And we’re delighted that a new Russian airline, Rosavia, is actively considering the acquisition of Boeing Aircraft. And this is a shameless pitch for Rosavia – I’ve said what you wanted me to say, Sergey – to buy Boeing Aircraft. Right? The ExIm Bank would welcome an application for financing from Rosavia to support its purchase of Boeing Aircraft, and I hope that on a future visit I’ll see a lot of new Rosavia-Boeing planes when I land in Moscow.” (“Secretary Clinton’s Remarks Following Tour Of Boeing Design Center,” United States Department of State, 10/13/09)

Two Months After Boeing Won The Russian Contract, Boeing Made Its First Ever Donation To The Clinton Foundation. “About seven months later, in June 2010, Russia agreed to purchase 50 Boeing 737s for $3.7 billion, choosing Boeing over Europe’s Airbus Group NV. Two months later, Boeing made its first donation to the Clinton Foundation—$900,000 to help rebuild Haiti’s public-education system. Overall, Boeing has contributed around $1.1 million to the Clinton Foundation since 2010.” (James V. Grimaldi And Rebecca Ballhaus, “Hillary Clinton’s Complex Corporate Ties,” Wall Street Journal, 02/19/15)

A Foreign Mining Corporation Received More Than $92 Million From The Ex-Im Bank . . . But Then Found More Than $1 Million To Fund An Event For The Clinton Foundation. “‘All the tainted money that Morocco has gathered from taking away our rights,’ said a former mine worker at Morocco’s state-owned phosphate company, ‘has been used to bribe the Clinton Foundation and the international community.’ OCP is the mining company, and it’s been criticized for ‘serious human rights violations.’ . . . But here’s another interesting detail on OCP: U.S. taxpayers gave the state-owned company a $92 million loan guarantee last year through the Export-Import Bank, so that OCP would buy equipment from a politically connected U.S. firm called Holtec.” (Timothy Carney, “Ethically Troubled Clinton Foundation Donor Received $92M In Ex-Im Financing,” Washington Examiner, 05/15/15)

The Ex-Im Bank Answered A Number Of FOIA Requests From The Pro-Clinton Super PAC American Bridge—While A Conservative Group Had To Wait More Than 500 Days. “In November 2013, Americans for Limited Government filed a Freedom of Information Act request for correspondence between a consulting firm with ties to the Clinton administration and Export-Import Bank officials. Today—more than 500 days later—the bank has yet to respond to the conservative government watchdog’s request . . . However, an examination of public FOIA logs from the bank found the super PAC American Bridge 21st Century has been more successful in obtaining records from Ex-Im.” (Melissa Quinn, “For Two Groups on Opposite Sides of the Aisle, Records Requests to Export-Import Bank Return Different Results,” Daily Signal, 05/06/15)

Hillary Clinton: “I’d Like To Put Ex-Im Bank On Steroids.” “Tea Party groups are attacking Democratic presidential frontrunner Hillary Clinton for her support of the Export-Import Bank, as the Congress debates a proposal to extend the embattled institution before it’s charter expires on June 30. Freedom Partners, a Tea Party group opposing the Bank’s reauthorization, began circulating video on Monday from a February 2010 hearing where Clinton testified before Congress that she wanted to ‘put the Ex-Im Bank on steroids.’” (Kevin Cirilli, “Tea Party Hits Clinton For Support Of Ex-Im,” The Hill, 06/01/15)

Ex-Im Official Secures Millions For Indian Solar Company, Then Joins Its Board.” “As a controversial federal agency prepares extensive taxpayer support for green energy companies in India, one such company has hired a former top official at theagency who has helped it secure millions in taxpayer-backed financing. Diane Farrell, who served on the Board of Directors of the U.S. Export-Import Bank and was a Democratic congressional candidate in Connecticut, will join the board of Indian solar company Azure Power . . . Farrell’s work has already benefitted the company. At Ex-Im, she steered nearly $16 million in taxpayer- backed financing to Azure for the purchase of solar panels manufactured by Arizona-based First Solar.” (Lachlan Markay, “Ex-Im Official Secures Millions For Indiana Solar Company, Then Joins Its Board,” Washington Free Beacon, 01/27/15)

A Lack Of Transparency And Accountability

Ex-Im Removed Previously Public Data From Its Website, Resulting In Less Transparency. “Critics of the Export-Import Bank are seething over the removal from a government Web site of previously public data earlier they say helps them detect cronyism. Between January 29 and February 13, officials at the bank removed disclosures listing businesses that applied for financing at the bank but were denied, a source at the bank told The Hill. ‘During a regular quarterly review, it was decided to reformat the way data is presented,’ the source said. Under the changes, bank officials are no longer disclosing denied applicants. But critics of the Ex-Im, created to help U.S. companies finance overseas endeavors, say that information helps illuminate how the bank chooses which businesses to finance.” (Kevin Cirilli, “Ex-Im Critics Pounce After Bank Yanks Data,” The Hill, 02/22/15)

The Missing Data Includes “Three Critical Fields That Were Available In The Original Dataset.” “[B]ut as I’ve noted, the dataset that is now available omits three critical fields that were available in the original dataset: the Primary Buyer, the Primary Source of Repayment, and the Primary Supplier. … the bank completely ignored the biggest transparency problem with their new dataset. The denied applications aren’t the only data missing: Three critical fields that provide information to the public about the foreign parties to each Ex-Im deal have completely vanished from the new dataset without any explanation.” (Veronique De Rugy, “Ex-Im Says They Took Down All Their Public Data Just To Reformat It, But The Reformated Data Is Still Missing Crucial Info,” National Review, 02/25/15)

The Export-Import Bank Mischaracterized Potentially Hundreds Of Large Companies And Units Of Multinational Conglomerates As Small Businesses. “The U.S. Export-Import Bank has mischaracterized potentially hundreds of large companies and units of multinational conglomerates as small businesses, a flaw in its record keeping that could undermine the export lender’s survival strategy. A Reuters analysis showed companies owned by billionaires like Warren Buffett and Mexico’s Carlos Slim, as well by Japanese and European conglomerates, were listed as small businesses and Ex-Im acknowledged errors in its data in response to those findings.” (Howard Schneider And Krista Hughes, “US Ex-Im Acknowledges Errors In Politically Sensitive Small Biz Data,” Reuters, 11/14/14)

Up To One-Third Of The Bank’s Buyers By Dollar Value Are Labeled “Unknown” Or “Various.” “[T]he bank’s data, when available, is a mess. So much of it is labeled ‘unknown’ and ‘various countries’ that it’s hard to use for proper oversight. … This chart shows the total dollar amount of deals financed by Ex-Im in which the Primary Buyer is marked as ‘unknown’ or ‘various’ in data made available to the public — 33 percent of buyers by dollar value aren’t named.” (Veronique De Rugy, “Where Is Ex-Im Money Really Going? We Can’t Say For Sure,” National Review, 04/03/15)

How Ex-Im Employees Feel About It

2013 Survey: Only 50 Percent Of The Bank’s Employees Said They’re Free To “Disclose A Suspected Violation Of Any Law, Rule Or Regulation Without Fear Of Reprisal.” (“Employee Viewpoint Survey,” Export-Import Bank of the United States, Accessed 06/23/15)

2013 Survey: Only 42 Percent Of The Bank’s Employees Surveyed Said That The Bank’s Leaders “Maintain High Standards Of Honesty And Integrity.” (“Employee Viewpoint Survey,” Export-Import Bank of the United States, Accessed 06/23/15)

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